EQT keeps its focus on things it can control
It would be his last speaking role at EQT Corp.’s annual shareholder meeting, Dave Porges said, and he seemed all but giddy to pass the baton.
Capping a 19-year tenure with the Downtown-based utilityturned-oil-and-gas-developmentandfirm, Mr. Porges worked the crowd with the ease of a man no longer responsible for piloting a company through low natural gas prices and shifting regulations.
Nevertheless, Mr. Porges said he was confident that EQT’s future is bright.
It has been a month and a half since he retired as CEO of the firm, handing the reins to Steve Schlotterbeck.
The company’s story remained unchanged since the last annual gathering — EQT is a low-cost producer of natural gas, the largest in Appalachia, with a growing pipeline business amid shrinking natural gas prices.
Last year, the company lost $453 million, compared with an $85.2 million profit in 2015. The average price it was able to fetch for its gas tumbled to $2.47 per thousand cubic feet. That takes into account the impact of hedging and is 20 percent below the 2015 average price of $3.09. In 2014, the number was $4.50.
The crowd — a generous term for two rows of directors and EQT executives, a retired utility worker who shows up each year just to “see what’s going on,” a pair of accountants, and a mother-son couple who sat in the back — was tame. Nothing like the protests of prior years that compelled Mr. Porges to halt one annual meeting as security emptied the room.
This year, there wasn’t even a shareholder resolution on the table and no one challenging the
company. Security nearly outnumbered non-company attendees.
Maybe the crowd was waiting for the show to start so they could grab lastminute tickets at a discount, Mr. Porges joked looking over the empty seats.
“What are you going to do with that coffee when you’re applauding mine and Steve’s remarks,” he ribbed director Vicky Bailey.
Then he sauntered over to the desk of EQT’s corporate secretary, picked up her wooden gavel and said he wondered why he doesn’t get to use it.
Mr. Porges dispensed with the company’s business in less than 10 minutes, announcing that shareholders had approved all of the directors nominated to the board, voted in favor of executive compensation packages and decided that a “say-onpay” vote should take place every year.
When it was Mr. Schlotterbeck’s turn to give a company update, he stressed EQT’s achievements in growing natural gas production and safety improvements. It’s a strategy of controlling “the aspects of our business that we could control,” he said.
The company has had seven consecutive years of production growth, averaging 25 percent or more each year, Mr. Schlotterbeck said. Despite low natural gas prices, slowing down doesn’t make sense, he said.
“We live and work in a cyclical commodity business,” he said, and because it takes a while between the time the company decides to develop a well and the time it starts producing gas, it’s impossible to predict how profitable that gas will be in the future.
“Our belief has been to be steady with our investment,” Mr. Schlotterbeck said. “We’ve learned in the past that trying to time the market is a fool’s game.”
The focus in the past few years has been on drilling longer horizontal wells and more of them on each pad. In 2017, the company said it will have an average of 13 wells on each well pad.
With a $1.5 billion capital budget, EQT plans to drill 207 wells this year, concentrating on the Marcellus Shale in southwestern Pennsylvania and northern West Virginia. It is also shooting for 81 wells in the Upper Devonian, a formation that sits on top of the Marcellus, and seven wells in the Utica, which is the deepest of the three.
More than 1,800 people work at EQT and its subsidiary companies, which include businesses that build and operate natural gas gathering pipelines, transmission lines, compressor stations and storage assets.